Caremark sued; price-fixing, kickbacks
alleged

October 3, 2003Ryan Mahoney, Staff

Two independent pharmacies have sued Birmingham-based
Caremark Rx Inc. and the other three big U.S. prescription
benefits managers, alleging illegal practices aimed at putting
them and other small drug stores out of business.

Four separate suits against Caremark, Express Scripts Inc.,
Medco Health Solutions Inc. and AdvancePCS Inc. - which
Caremark is buying to become the No. 2 player in the industry
- were brought by North Jackson Pharmacy Inc. of Stevenson,
Ala., and Big C Discount Drugs of Thomaston, Ga. They were
filed in U.S. District Court in Birmingham by local HMO lawyer
Archie Lamb.

The four PBMs, which buy prescription drugs from
manufacturers for employers and others, collectively oversee
benefits for roughly 70 percent of the U.S. population.

The plaintiffs, who are seeking class-action status, claim
Caremark and company charged independent pharmacies unfair
additional costs for their services and forced health plan
members to use PBM-owned mail-order pharmacies instead of
traditional ones.

They also say the PBMs artificially depressed prescription
prices paid to pharmacists and accepted rebates, discounts and
other incentives from drug manufacturers in exchange for
promoting their products to physicians and pharmacists.

"PBMs have one goal: to control the prescription drug
retail marketplace," says North Jackson president Bryan Hicks.
"If left unchecked, PBMs will obliterate the remaining
25,000-plus independent pharmacies today and tomorrow will set
their sights on all pharmacies."

"PBMs have a long history of deceptive and abusive business
practices," Lamb says, "and we have only seen the tip of the
iceberg."

Lamb also represented thousands of doctors in a
class-action case against the nation's major health
maintenance organizations. Aetna Inc. and Cigna Corp. recently
settled for a combined $200 million; other HMOs are still
fighting the charges.

Caremark, which is in the process of relocating to
Nashville, Tenn., says it has not yet reviewed the suit, but
that the allegations against it "fundamentally mischaracterize
Caremark's business practices and are without merit."